The effect of access to payday loans on economic well-being is ambiguous from a theoretical perspective. Neoclassical models claim that customers utilize pay day loans if they are better than the alternatives that are available. Such models imply restricting access would make consumers worse necessarily off. Having said that, behavioral models of pay day loan usage mean that current bias, overoptimism, or any other intellectual biases can cause consumers to obtain payday advances even though doing this is suboptimal, as judged by their preferences that are own. If such models accurately describe behavior, limiting use of payday advances will make customers best off.
The consequence of Payday Loan Regulations in the Use of Other Credit Products
The empirical literary works on the hyperlink between access to payday advances and economic wellbeing involves blended conclusions. Continue reading “The result of Cash Advance Regulations on Financial Well-Being”